Sasol to push ahead with US investments, posts higher earnings

London (Platts)--10Mar2014/516 pm EDT/2116 GMT

South Africa-based Sasol said Monday it would take a final investment decision this year on its plan to build a world-scale ethane cracker and downstream derivatives complex and a high density polyethylene plant, both within the US.

A weaker rand and higher chemical prices helped the energy and chemical company report earnings per share of 30.19 rand ($2.80) in the six months to end-December, up 26% year on year.

The proposed Westlake petrochemical site, which includes a 1.5-million mt/year ethylene cracker, was expected to come on stream in 2017 and provide products including low density polyethylene, high density polyethylene and linear low density polyethylene.

Alongside a gas-to-liquids project, the plant was expected to cost $16-21 billion and create 1,200 jobs. It is one of the biggest foreign direct investments in the US manufacturing sector, and construction has been slated to start this year.

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The company signed a memorandum of understanding last June to build a US HDPE plant with capacity to produce almost 500,000 mt/year of polyethylene.

Sasol's international polymer business posted a 24% increase in turnover to 10.362 billion rand largely as a result of higher prices and the weaker rand, while revenue from its solvents business fell 7.8% to 8.85 billion rand.

Sasol, with over 34,000 employees, is one of a number of companies seeking to take advantage of gas prices that have fallen two thirds in the past four years due to a rise in shale gas drilling in North America.

According to Platts data, around 10 crackers are being built in the US, potentially producing 10 million mt of additional ethylene per year and increasing global supply by around 6%.